China’s State Banks to Raise $71.6 Billion to Boost Capital

China’s four largest state-owned banks announced plans on Sunday to raise a combined 520 billion yuan ($71.6 billion) through private placements, including from major investor the Ministry of Finance. The move comes as Beijing pledges stronger financial support to bolster the country’s slowing economy.

Strengthening Tier 1 Capital Amid Economic Challenges

The capital injection aims to enhance the banks’ Tier 1 capital, reinforcing their ability to support the real economy. Earlier this month, Chinese authorities committed to recapitalizing key state banks with 500 billion yuan in an effort to stabilize financial markets and counter economic headwinds.

Among the fundraising plans:

• Bank of China seeks to raise up to 165 billion yuan

• China Construction Bank plans private placements totaling 105 billion yuan

• Bank of Communications will issue up to 120 billion yuan in shares

• Postal Savings Bank of China aims to secure 130 billion yuan

  
  

Government-Backed Capital Injection

China’s Ministry of Finance, a key shareholder in all four banks, is expected to play a significant role in these capital increases, according to official filings released on Sunday.

This large-scale fundraising effort comes as Chinese banks report steady annual profits but narrowing margins, weighed down by an economic slowdown and ongoing turmoil in the real estate sector.

With Beijing ramping up financial support, the capital infusion is expected to strengthen lending capacity and shore up confidence in China’s banking sector.